Dubai: Drake & Scull seeks new strategic investors
DSI has been hit hard by an economic slowdown in the region due to low oil prices
Dubai-listed construction and engineering company Drake & Scull International (DSI) has asked advisers for proposals to review its business and find strategic investors, its chief financial officer told Reuters.
The contractor reported a year-on-year decline of 23% in revenue, which stood at $490m (AED1.8bn) in H1 2016 as compared to $650m (AED2.39bn) achieved in H1 2015, whereas net loss for the same period stood at $59m (AED216m).
Like many other Gulf construction companies, it has been hit hard by an economic slowdown in the region due to low oil prices. Governments have cut spending on new projects and in some countries, including Saudi Arabia, they have delayed payments to firms for work already completed.
DSI has held informal talks with advisers in recent weeks on a possible business review and on finding new equity for the company, its chief financial officer, Kailash Sadangi, said in a telephone interview.
"The new leadership is strategically transforming the business to bring it back to a profitable growth trajectory," he said. Sadangi became CFO earlier this year as part of a management shake-up, which also saw the appointment of a new chief operating officer.
The company has appointed a legal adviser to hold discussions with the UAE stock market regulator, the Securities and Commodities Authority, on the possibility of bringing in strategic investors and regulatory approvals that would be needed, Sadangi said.
An issue of mandatory convertible bonds is among options being considered, he added. Such bonds must be converted into underlying shares by a specific date.
Sadangi said DSI had made a strategic decision to withdraw gradually from its civil engineering business in Saudi Arabia, but would continue civil engineering operations in the UAE through its subsidiary Gulf Technical Construction Co.